Russia’s invisible, ubiquitous lobbyists How armies of fixers and specialists negotiate the nation’s dicey relationship between businesses and the state
Technically speaking, lobbying doesn’t exist in Russia. The concept, at least, isn’t established anywhere in the country’s laws, and the activity itself isn’t formally regulated in any way. On December 18, just the latest business association encouraged the parliament to rectify this situation, though previous efforts like this one have always come to nothing. There are, nevertheless, many people in Russia who earn a living by mediating between the country’s state and businesses, defending the interests of entrepreneurs and campaigning for the legislation they consider necessary. Some of these people use legal methods, while others — the so-called “fixers” — resort to money, connections, and even threats. Meduza special correspondent Taisiya Bekbulatova learned more about these individuals to understand how Russian lobbying really works.
“Do you know how the state came about?” asks Marat Bashirov. “There was a guy fishing and there were some other guys with clubs who ran up and took his fish. And one day the side with more clubs told the fisher, hey, let’s agree that you’ll supply me with fish and I’ll protect you from these other idiots. And that was it. At that moment, he took on the role of regulator and violent enforcer. This was the origin of the state.” After some more thought, Bashirov adds, “The lobbyist in this scheme, obviously, was the third person who came on behalf of the others slaving away and said: hey, can we join? The guys with clubs keep coming for us, too, and we’d rather pay a little less to just one person.”
In Russia, the terms “lobbying” and “GR” (government relations) are typically treated like synonyms. In both cases, the words refer to people who act as intermediaries between businesses and the state, representing the interests of the former. “For me, a lobbyist is a person who’s responsible primarily for the regulatory sphere, and not for communications,” says Bashirov, explaining that lobbyists are usually hired for single jobs, not regular, ongoing work. “But with government relations people, it’s the opposite. Their function is more communications-based than legal,” he says. Companies usually employ GR specialists as full-time staff, but it’s not profitable for businesses to keep lobbyists as permanent personnel, so they’re typically outsourced. According to Ivan Glushkov, “internal” GR specialists often recruit outside lobbyists to help them with their work.
“Now even lazybones are calling themselves GR managers,” says one person in this field. The clients for government relations work are usually large businesses and industry associations. Demand is especially high among foreign companies that need a guide in unfamiliar waters. “We hear a lot about the need to listen to what businesses are saying, but often this boils down to holding some conference attended by representatives of the Russian Union of Industrialists and Entrepreneurs [RSPP], and they act like that amounts to having considered the interests of the business community. But even a brilliant person like Alexander Shokhin can’t embody everything,” explains Oleg Rumyantsev, whose clients include film studios, an association of cleaning companies, pet food producers, and a large tobacco corporation.
“Under current conditions, the communication channels are nearly monopolized. The authorities reach decisions based on inadequate expertise and one-sided perspectives,” says Eduard Voitenko, advocating the need for lobbying. “To get a sense of the interest in lobbying, just look at the industries where the dialogue between businesses and the state hasn’t taken shape, or where it stumbles because of significant misunderstandings.” As an example, he points to the foreign pharmaceutical companies that obtain lobbying services in Russia, where the state “pursues a policy of import substitution” and businesses want to avoid the problems this can cause.
According to Stanislav Naumov of the X5 Retail Group, there are only a few dozen effective lobbyists in Russia (though various estimates say there are several thousand on the market). “If you take Forbes’ Russia list, then everyone named there must have their own guys who maintain [their ties with state agencies] at a working level, and who can get a needed paragraph inserted into a government response to a parliamentary initiative,” he says. “Oligarchs aren’t going to do this [themselves].” Sergey Zverev, the founder of the Public Relations Development Company and a former deputy chief of staff to the Russian president, compares lobbyists to “cloak-and-dagger servants.” “You don’t see them,” he explains, “but there are a lot of very qualified specialists at work, and they solve problems.”
Serious business behind closed doors
In legal terms, lobbyists in Russia are invisible, unlike, say, in the United States. In Russia, lobbying is unregulated. People working in this field told Meduza that the decision-making process is informal and largely happens behind closed doors. This arrangement is due in part to the peculiarities of the contemporary Russian state. “How do you regulate [lobbying] if the people involved in making certain decisions often don’t hold any formal office?” asks Evgeny Minchenko, throwing up his hands. “Rotenberg is more influential than a lot of federal ministers. But who is Rotenberg?”
According to Stanislav Naumov, “Unfortunately, lobbyists have to fight to find out who thinks what about what.” Ivan Begtin, who calls himself an “open-source lobbyist,” says working in this field is mostly “behind the scenes.” “All these public expert councils are just a show for the people on the outside. All the serious stuff happens behind closed doors. Like the renovations. You didn’t hear anything about them until it was already happening. And the Yarovaya [counter-terrorism] laws were a surprise to everyone in the industry.”
Russian lobbyists face many challenges, not least of which is the country’s repressive approach to drafting new legislative norms. Naumov says lawmakers in recent years have tended to resort to outright prohibitions whenever designing new regulations. “And they keep tightening and tightening [the screws], but nothing happens. The rabbits go hungry and things don’t end so well for the partisans, as the joke goes,” he says. As a result, lobbyists spend most of their time trying to prevent the next ban, often battling against exclusively political arguments for legislation that disrupts whole industries.
New laws are usually adopted as “instantaneous reactions to something that arouses the public’s indignation,” and the political system is incapable of recognizing when its decisions are flawed, says Naumov. As a result, one bad legislative initiative is often followed by another, and so on, ad infinitum. “The problem is that it’s optimal to repeal something old, if you’re instituting something new. But what happens in Russia is that something is passed, but nothing from the previous series of regulations is repealed,” complains Naumov. “With the alcohol market, they decided to prohibit the sale of liquor near grade schools because children apparently could run off to the store during recess and [drink] something there. Then, on top of this ban, they prohibited the sale of alcohol to minors, before also banning the advertising of alcohol outside stores.”
Thanks to informal procedures and the absence of a clear legal framework, “even formidable businesses act like petty crooks [with lobbyists],” says Andrey Kolyadin. He recalls how he was once hired by a construction company to solve a problem for “a St. Petersburg supermarket chain.” “They’d bought a bunch of land in Yekaterinburg, but they’d registered it incorrectly and didn’t know what to do. We agreed that in exchange [for solving their land problem] they would accept a deal to hire our contractors to build a new supermarket,” he says. “But when we resolved the land issue, they kicked us to the curb and found a new contractor. They said: we’re going to use our own guys, and you can go ahead and sue. We’ll break out our lawyers, and you’ll spend the rest of your lives in court.”
Russia’s useless parliament
“I spent my working day today on visits to the presidential administration and the federal government’s offices. Yesterday I was at the State Duma,” says Oleg Rumyantsev. It’s sometimes assumed that Russian lobbyists work with all branches of the state, focusing their efforts on the parliament. In fact, lobbyists spend more time talking to the executive branch and various federal agencies (especially the Anti-Monopoly Service and the ministries that oversee the real sector of the economy, such as the Industry and Trade Ministry and the Construction Ministry). As a rule, lobbyists work in the particular industries they understand best, says Marat Bashirov, who specializes in electric power and housing and utilities.
It’s also necessary to work with officials at the regional level, which is true for GR managers hired by retail chains and pharmaceutical companies. Naumov says there’s no avoiding the despotism of regional officials. “When a governor doesn’t have enough money, for example to fulfill the ‘May Decrees,’ he summons his financial chief and says: hey there’s no budget left. Our tax revenue has fallen. Get the national retail chains in here! Let them stock our [locally produced] vodka on their shelves, and then we’ll get more tax revenue!” says Naumov. “Once we said to one of these ambitious officials: hey, and how about you and your whole office show up on payday to buy it all.”
Lobbyists were far more interested in the State Duma before 2005 or so, when it was still one of the Russian political system’s main players. Sometimes businesses pushed their agendas openly at the State Duma. In 2002, for example, the “Narodnyi Deputat” (People’s Deputy) Duma group and the “Metalloinvest” holding company reached an agreement on “cooperation in the legislative sphere.” “Ordinary lobbying is fine; it’s not a secret for anybody,” Martin Shakkum, then the deputy chairman of the Duma’s banking committee, said at the time.
Over the past two decades, however, the balance of power in the federal government has shifted in favor of the executive branch. Russian lobbyists say they still go to the State Duma, of course, but — as one of them put it — these trips are more about maintaining a public facade: “so and so say they’re in favor, so and so say they’re opposed, and everybody goes home happy.” In reality, all the decisions are made elsewhere.
“Over the past several years, the parliament’s role has unfortunately disintegrated,” says Naumov. “The problem is that the issues raised by lawmakers aren’t discussed for more than 20 minutes. Maybe it would be better if they didn’t consider eight separate matters in a single session? Maybe they could address one issue but discuss it from all sides?” Ivan Begtin says he once attended a meeting of a State Duma working group and witnessed “absurdity” that he says “eclipsed everything he’s done in his life.”
According to Marat Bashirov, another important factor is that most of the laws adopted by the State Duma articulate only a general framework, and the real substance is written by the government in the form of statutes and regulations. “Sometimes they adopt a law and everyone’s watching, but it’s toothless!” a lobbyist told Meduza. “Everyone calms down and there’s a little note that says the law will be implemented by statutes and regulations. And the government is already slogging away at these, writing them in the interests of different groups. In the best case scenario, they’re in the interests of the state.”
“The main thing lobbyists try to do is influence the regulatory instruments and enforcement agencies prescribed in legislation,” says Begtin. “With state procurements, I know that clans fought tooth and nail over who would be subject to what [statutes and regulations] and which agency would be charged with enforcement. When they got rid of [former Economic Development Minister Alexey] Ulyukayev, the Finance Ministry instantly seized the procurements issue. Afterwards, the Federal Antimonopoly Service hurried to embed its own people in the Finance Ministry. All at once, everyone was at daggers drawn.”
“[The Economic Development Ministry] is toothless, of course. They even took procurements away,” says another lobbyist. “It’s unclear what you could lobby for over there. That’s why the Economic Development Ministry is the friendliest, most open federal agency. Just try making contacts somewhere like the Health Ministry, where you couldn’t get in the front door if you were riding a cannon ball. That’s because there’s big money there: the state’s medical contracts.”
“In countries with a strong legislature, the political players are deputies, congressmen, and specific parties, to whom you can appeal and persuade, one by one, proposing this or that law,” says Begtin. “In Russia, we have a problem with our deputies: they’re invisible and unknown. [Russia’s] parliament, for instance, was one of the first to implement the concept of open data. It has an open API [application programming interface], containing the data from all speeches, sessions, and votes. The whole thing is wonderful, but the problem is that nobody needs it. And herein lies the bane of all government relations: When faced with this strict political monopoly, the only way really to pass a bill rigorously is to introduce it through the office of the president.”
According to Bashirov, the skew toward the Kremlin emerged in the mid-1990s, when old regulations needed to be rewritten and “it was decided that the coordinators and the center of competence were located in the presidential administration.” Today, he says this has led to a situation where the signature of Larisa Brycheva (the head of the Kremlin’s state legal directorate) “is enough to block any legislation or regulatory statute,” even though her position isn’t constitutionally part of Russia’s lawmaking process. Bashirov believes this power distribution is wrong and calls for reforms: “Either legalize the presidential administration through the Constitution, or turn [the State Duma] into a normal legislative body.”
In his new position as State Duma speaker, even Vyacheslav Volodin lacks basic state authority. Together with Federation Council Chairwoman Valentina Matviyenko, Volodin wanted reforms to boost the number of direct regulatory acts passed by the parliament. Bashirov says he believes this would have benefitted both the government and businesses, but “it turned out that wishing wasn’t enough” — you need the president’s support and you need substantial resources. “The government has a legislative activity committee, and 1,100 statutes and regulations passed through this commission in just the first quarter of last year. Its workload is gigantic,” says Bashirov. “They’re capable of processing all this. The State Duma is not.”
While most of Russia’s lobbying work goes on behind the scenes, the visible battles occur when the State Duma adopts direct regulatory acts. One of the hardest fought “lobbying wars” broke out in 2008, when lawmakers voted in new regulations on milk products. The 202-page document included a major change for the market: now milk prepared from powder needed to be labeled a “milk drink.” The Agriculture Ministry calculated that the new requirement would drive Russian farmers to buy more whole milk. Reconstituted-milk manufacturers strongly opposed the new policy, warning that their business would suffer and that Russia’s whole milk production would be insufficient to supply the entire market. After a public debate, the legislation was nonetheless adopted, and State Duma Speaker Boris Gryzlov announced, “Now milk will only be what a cow produces.”
Bashirov says he’s certain this was the right precedent, but today’s fight over legislative decisions “is simply invisible to the entire public.” When there’s a debate in parliament, he says, it’s another story: “As soon as you start pursuing this in the State Duma, everyone will know.”
A mix of the bad and the very bad
“Civilized” lobbyists focus their work on the statutes and regulations drafted by the government. According to Rumyantsev, the key task is to engineer changes in regulyatoriki (regulatory documents). This, he says, is what makes them “a part of the food chain in the legislative process.” The greater the state’s regulations, the more that industry needs lobbyists.
“Seventy percent of lobbying is understanding how this or that decision-making institution functions and knowing its internal rules and understanding how its interdependencies are structured. And these internal mechanisms are changing constantly,” says KROS president Sergey Zverev. “The other 30 percent is a mix of your relationships, your creativity, and so on.” He compares what lobbyists do to a “multidimensional chess game”: you’ve got to know “who the participants are, how issues are developing, where the agreements are taking place, and where pitfalls could be.” Often, in order to resolve a problem, “you need to help a state official with something that’s totally unrelated to the issue at hand.”
Filipp Gurov, whose clients are mostly IT companies, says his work frequently amounts to knowing “what troubles are afflicting particular officials at any given time” and solving those problems to the benefit of his clients. He says what customers want most of all is “exposure” to state officials, so a federal minister, for example, visits their stand at an exposition.
Political consultant Evgeny Minchenko offers a lobbying service called “GR orientation,” where he helps clients “map decision-makers and their interests, motivations, and planning horizons,” and uses this data to develop “strategies for advancing their interests.” Minchenko showed Meduza an example of one of these maps, where red lines between individuals indicate conflicts, and black dotted lines signify cooperation. A standard government relations strategy runs about 100 pages. “There are one or two pages laying out the strategic benchmarks, key performance indicators, and phasing, and then there’s a description of the tools, allies, opponents, and the strategy for each category.”
Minchenko offers another service called “political risk minimization,” where he says his agency “runs diagnostics and then tells clients, ‘Get down! Get to the chopper! Come with me if you want to live.’” He says his team identifies problems like potentially serious conflicts with local governors and rent-seeking troublemakers in regional parliaments. There are different ways to address these problems, Minchenko told Meduza. “The simplest option is to ensure that these people fail to get re-elected. You make deals, you set obstacles, and you field your own troublemakers.”
Specialists working in government relations are constantly monitoring industry news reports to track regulatory risks. “The government has a lawmaking activity plan that’s published a year in advance. The plan entails legislative changes and new statutes and regulations. And there are also plans for lawmaking activities by the federal executive authorities. So everyone knows what will be under review, and they basically gauge what the impact could be, and then they write up the risks. This process repeats endlessly,” says Bashirov.
The government is constantly rewriting its regulatory statutes, which offer considerably more wiggle room than you find in most legislation adopted by lawmakers. “If they adopt a law that’s unfavorable to some business, then this is where we step in and try to make changes — right away, too, because we’re talking about losing money,” Bashirov explains. “The cost of hiring lobbyists is negligible compared to what a business stands to lose.” GR League Association President Oleg Rumyantsev told Meduza, “We try [to step in] before decisions are actually made, so we’re not too late.”
Lobbyists’ main instrument for influencing the decision-making process, says X5 Retail Group President Stanislav Naumov, is providing state officials with information. “The problem is that our government officials responsible for drafting these decisions are under-informed,” he says. “Though the state likes to think of itself as Big Brother, this Big Brother doesn’t have Big Data. The Big Data is with us: the big corporations that constantly interact with the end user.” Naumov says his company, X5 Retail Group, shares information with Russia’s Industry and Trade Ministry, the Federal Antimonopoly Service, the Agriculture Ministry, and consumer rights and veterinary regulators.
Other lobbyists also told Meduza that the main way they get information to state officials is by providing expertise that’s necessary for their regulatory work. In order to reach decisions, officials need to base their conclusions on something, Marat Bashirov says, and they’re often left with nothing but the numbers from the Federal State Statistics Service, which “don’t reflect the real state of affairs.”
Bashirov admits, however, that the independence of the expertise offered by lobbyists is often questionable. “You show up and say, hi, I’m an independent expert and I’ve prepared this study for you about the milk market. But at the same time the industry is also backing you.” He says every government ministry informally welcomes expert reports from certain organizations. “Often they’ll say directly: guys, go to the Higher School of Economics. There’s this institute there, and if they endorse it, I’ll adopt it. And so businesses go there and order a study.”
Expert analysis is another lobbyist battleground, where clients with competing interests sometimes go to war. Bashirov says a vivid example of such conflict is the rivalry between electricity producers and consumers: “There’s something called the Energy Consumers Association, headed by Vasily Kiselyov, and the Energy Producers Council, led by Igor Mironov. And they’re both latched onto the same officials at the Energy Ministry, clinging with their hands and feet.”
“As a rule, when you read a government project or proposal, you know who’s behind it and who wrote it,” says Ivan Begtin. “Considering the structure of our state and the confusion that reigns, what usually happens is a mix of the bad and the very bad. The bad is commercial lobbying by companies that want to achieve something, and the very bad are the different breeds of government-affiliated experts who toss their ideas into the pot. The ministries compile this, while constrained by all the initiatives laid out in orders from the president and his cabinet. The result is a nightmarish blend.”
It’s not enough to get the “necessary” provisions added to new statutes and regulations, as everything also needs to win the support of the Finance Ministry and pass an anti-corruption review (“not a single ordinance enters force until the Justice Ministry approves it”). According to Bashirov, “the Finance Ministry automatically rejects any regulatory statute that would raise government spending or reduce the state’s revenue. It’s just automatic.” In industries where lobbyists are the strongest, regulatory statutes change only rarely: “Sometimes it’s months and sometimes it’s years. Everyone simply digs in and fights to the end.”
Marat Bashirov cites one of his own projects as an example of successful lobbying: “Rental costs for real estate outside power stations varied widely in regions across the country, and we realized that this thing was simply unregulated. It turned out this was hurting lots of energy companies. So there was a [jointly lobbied] letter from the Economic Development Ministry that set a procedure and laid down criteria for drawing up leases.” Thanks to this, Bashirov says, his client saved something like 800 million rubles ($14 million) that year.
Men of iron backs and backsides
Industry groups and business associations are instruments that lobbyists use constantly. People working in this field told Meduza that state officials are more inclined to consider the opinions of public coalitions than listen to specific companies. “They act like public servants, but they get by on money from businesses. We’re basically talking about illegal lobbyists. A few market players divide up the cost of government relations,” says one of Meduza’s sources.
The heaviest hitters are the Russian Union of Industrialists and Entrepreneurs (RSPP), the Chamber of Commerce and Industry (TPP), “Opora Rossii” (Russia’s Support), “Delovaya Rossiya” (Business Russia), and a few other specialized associations like the particularly effective All-Russian Insurance Association run by Igor Yurgens. But it’s not enough just to be a member of any of these groups, says Filipp Gurov. If you want actual solutions to your problems, you need to snag a role in one of their governing bodies or you need to create your own committee within an association.
Ivan Begtin calls lobbying through business associations and expert councils “soft lobbyism,” which he contrasts with “hard lobbying” that relies on government “insiders.” On many public councils, he says, you’ll actually find representatives from different businesses posing as scholars and spokespeople for nonprofits. “In recent years, we’ve come to see direct commercial affiliations as something rather inappropriate. And yet everyone knows that this or that person isn’t really some respected university professor but is in fact a pretty major entrepreneur,” Begtin explains. “I can think of commercial organizations where all four executive directors are representatives on different expert councils.”
Marat Bashirov confirms that lobbyists and government relations specialists do everything they can to embed themselves in expert councils. “Business is also a part of society,” he says, admitting however that his clients’ commercial goals are often far from the public interest. “It’s hard to imagine that an entrepreneur sitting on a public council in the Agriculture Ministry would represent the interests of someone he doesn’t care about.”
“I don’t like the word ‘lobbyist’ for the reason that I work in government agencies, not in the lobby of a hotel, which is where this word comes from [sic],” says Oleg Rumyantsev. “I meet with state officials entirely in the open.” In his view, the “primary means of promoting interests” is participation in different advisory groups. “The second approach is meeting with stakeholders — at their offices or you can meet them for lunch or dinner,” Rumyantsev says. “Honestly, it’s actually quite a strain on government relations specialists: working breakfasts, working lunches, and working dinners.”
Other sources told Meduza, however, that expert councils aren’t enormously effective, though they do make it easier for business representatives to be in contact with government agencies. Nonprofit lobbyists like Greenpeace and various charitable organizations also use membership in these councils to advance their interests.
Stanislav Naumov, who has a seat on the board of trustees at the Charitable Foundation for the Development of Palliative Care for Children, says it’s impossible to address any problem related to disabled people “without first overcoming three or four waves of resistance at any particular state agency,” despite the fact that they’ve all declared supposed “barrier-free environments.” Other sources confirmed to Meduza that the organizations created to offer platforms for civic interests (the Public Chamber, the Open Government, the All-Russian People’s Front, and others) have failed.
“We get paid to do this, but there are a lot more people who do it for no money at all,” says Bashirov. “They show up at the same state agencies, where they’re treated like dirt. They don’t understand how these agencies work. Nobody explains anything to them, and officials aren’t required to listen. These people come and argue, for instance, that they want a children’s playground, going to the town hall or the prefecture to give hell to local officials. This is also lobbying.”
All the lobbyists who spoke to Meduza agreed that good relations with state officials are necessary for their work. “It’s important because an official might talk to you informally, if he knows you’re a qualified, decent, and friendly person. He might even call you himself and say, hey, I’ve got this situation here and what do you think?” says Bashirov, who fills out his week by playing soccer with a group of state officials. He says it’s most important to make friends with secretaries, guards, and drivers (“they know everything”). Building these relationships is a whole other science. “If you walk up to an older official and say ‘EBITDA,’ he’ll think you’re swearing at him. You’ve got to say ‘profits before taxes,’” Bashirov explains. “For example, once I was at a meeting with [Rosneft CEO Igor] Sechin about coal reserves at power plants. At one point, he asked the group if there was anybody there from the company, and I stood up and gave him an update. Sechin is a veteran, and I spoke to him like they would in the military. But some of the other people there were too casual.”
But connections aren’t everything, sources told Meduza, and it’s also vital to understand the regulations that guide and limit the work of officials. Knowing the decision-making procedures and being able to work within these parameters is essential. Coincidentally, there’s also noticeably high turnover at Russian state agencies, and former officials who already know the government’s internal practices often become lobbyists themselves. “Today you’re a deputy’s assistant, but tomorrow you could be a department deputy director, and a day later you’ll be management at a government relations firm,” says pharmaceutical company head Ivan Glushkov. “Not a bad career.”
In conversations about lobbying, you often hear the phrase “The best lobbyist is Sechin,” implying that corporate CEOs strike the best deals with the state. Industry insiders say this misses the picture. “Anyone who can get a meeting with the president isn’t a lobbyist but a player himself,” once source told Meduza. “By default, lobbyists are second-tier players.”
According to Marat Bashirov, lobbyists perform a “back office” role. Oleg Deripaska, the founder of the Basic Element industrial group, approached First Deputy Prime Minister Igor Shuvalov, “with some sheet of paper” and Shuvalov “issued a visa,” Bashirov says. “From there, the matter goes all the way to the bottom — to the ministry — and it accumulates even more instructions as another two ministries get involved. Deripaska isn’t the one who runs between these agencies. He’s got specially trained people [for that].”
“A done deal is more than a handshake,” says Glushkov. “It’s a whole process and a large number of documents. You think CEOs have time for that? Yeah right.”
Stanislav Naumov, who in 2012 managed the department that established Russia’s “Open Government” system, says he was left outgoing Deputy Prime Minister Igor Sechin’s “hotline.” “A few times, oligarchs phoned me and said, ‘Greetings, Mr. Sechin,’” Naumov recalls. “If you’ve got [special connections], then of course you’ll be getting things done in three days, not three months, like the people without them. But the government’s anarchic system nevertheless renders all these quick arrangements meaningless. Even a presidential order has to be monitored with the same scrupulousness as an initiative by the head of a regional chamber of commerce. Officials might implement it wrong. They might implement it in their own way.”
“It’s actually a pretty mind-numbing job,” says Marat Bashirov. “It’s a ton of paperwork and a lot of sitting in meetings. You need an iron back and backside.” Two or three times a week, lobbyists have to attend different council meetings that run three hours long. “There might be 10 questions there, and yours is just one of them. You can’t stand up and walk out, even if your question is the first one answered. The deputy minister is sitting there, too. If you get up and leave after speaking, he’ll turn around and ask, ‘Who the hell was that?’” Bashirov says, warning that people who behave like this might learn that they’re unwelcome at the next meeting.
Asked if lobbyists have any other tools at their disposal, Bashirov answers, “No. Well, except the corrupt ones.”
Because Russia has no laws on lobbying, it’s impossible to estimate the industry’s size. Customers can’t even designate lobbyist services in contracts, and this work is usually recorded as “consulting.” “We try to reach agreements with clients that we will receive certain payments for completing a process and get bonuses for achieving results,” says Oleg Rumyantsev. “Between $10,000 and $15,000 a month is generally considered the average norm for the process.” Filipp Gurov says the price tag on large projects starts at several million rubles (more than $50,000). “There’s no upper limit here,” he explains.
Sources told Meduza that they estimate Russia’s lobbying industry would be worth upwards of 20 billion rubles ($351.4 million) a year, if it were regulated openly.
Not every country has special legislation on lobbying. The best-known regulations in this industry are in the United States, where lobbyists have to register specially and report their sources of funding. Russia has a long and complicated history when it comes to the regulation of lobbyists, but the short version of this story is that the government has yet to adopt any special laws.
“Officially there is no lobbying in Russia (which is bad, strictly speaking), but it’s always flourished brilliantly behind the scenes,” Sergey Ivanov said in October 2015, when he was still President Putin’s chief of staff. In March 2016, then Russian Human Rights Commissioner Ella Pamfilova called on lawmakers to adopt legislation on lobbying, following news that the Attorney General’s Office had flagged more than 35,000 regulatory statutes as corruption risks. Most recently, on December 18, 2017, the Association of Entrepreneurs for the Development of Business-Patriotism (known as “Avanti”) petitioned the State Duma to draft regulations on lobbying.
Efforts to develop special legislation date back to the early 1990s, but they’ve always failed. Industry insiders say the reason is simple: the absence of regulations has its drawbacks, but the adoption of a “crooked” law could be even worse.
“They’ve proposed requiring state officials who rank above department head to record their meetings with people who represent companies and NGOs — to log why they met and for how long,” a source told Meduza. “What a joke. I’ll meet with them after hours like I already do. The whole thing makes no sense.” “Meetings [between lobbyists and officials] will happen no matter what, but now they’d be taking place in a gray area,” says Oleg Rumyantsev.
So far, no one has managed to propose regulations that satisfy the lobbyists themselves.
“They’re only suggesting licensing and accreditation. This doesn’t add anything to the industry, but it would immediately create certain beneficiaries,” says Baikal Communications Group CEO Eduard Voitenko. Another lobbyist who spoke to Meduza shared this complaint. “At worst, they’d screw me over and bury my business, and at best I’d be forced to pay tribute for their protection. Of course I’m against such a law on lobbying,” he said.
Most of the lobbyists who spoke to Meduza agreed that legalizing their profession (through legislation or regulations) should help minimize the risks they face in their industry. “There are, of course, a lot of shady things. For example, you pay for an expert report that includes the text of proposed regulatory statutes. Then you share it with a state official, he likes it, and he copies the whole thing,” says Marat Bashirov. “So it turns out that you indirectly paid money to have this written for them? And how does that look? It’s not great, which is to say that this needs to be legalized.”
Ivan Begtin compares legislation on lobbying to California’s legalization of marijuana: “It won’t raise or lower consumption levels; it would just be a way to get some tax revenue.” “Sensible legislation would be better than none at all,” says Ivan Glushkov, noting that it could make it easier for companies to find and hire lobbyists. “The main effects would be an expansion of the market, higher confidence in the work of lobbyists, and the market would gain significantly in financial capacity,” says Eduard Voitenko, explaining that foreign companies currently don’t allocate a separate budget for lobbying services in Russia. “In some cases, it’s treated like public relations, and other times it’s seen as marketing,” he says.
“If they could pass the right kind of legislation on lobbying, it would be good for everyone. It’s just that Russia isn’t quite ready for this,” one lobbyist told Meduza. “We’re not like [Moscow Mayor Sergey] Sobyanin: we don’t want to do the thing first and then take a beating for it.”
Professional lobbyists acknowledge that their line of work is commonly associated with corruption, but anyone in the industry will tell you with equally strong conviction that they never resort to illegal methods in their business.
“Bribes are bribes and lobbying is lobbying. They’re two different forms of life support, you might say,” says Sergey Zverev, the founder of the Public Relations Development Company. “It’s just that we’re accustomed to thinking of lobbying in clichés, assuming it’s all bag drops. Actually lobbying is about formulating your own agenda, presenting it coherently to partners, searching for allies, and interacting wisely with opponents,” explains Evgeny Minchenko. “It’s complex, and probably the costs in the end might be comparable to delivering bags of cash. However! Lobbying has two advantages [over bribes]: First, you won’t end up in prison. And second this kind of activity is far more effective and the results are more stable.”
“In the 1990s, during Russia’s initial accumulation of capital, [illegal lobbying] undoubtedly dominated,” Sergey Zverev admits. “I would talk to colleagues back then who would say, ‘Why? Why do you bother with all these complicated schemes, when it’s possible to deal with things more easily?’ And it was hard to object to this.”
According to Minchenko, Russian lobbyists today mostly practice “civilized methods.” “Listen, everybody is scared. They’re cuffing people before they even reach the door. [Officials] are afraid of civilized lobbying, too,” he says. “How many senseless criminal cases have there been? The case against Sandakov, for example, is completely baseless. How can people even imagine that a governor’s aide offered to make someone mayor of Magnitogorsk? Everyone knows perfectly well that this will be decided by a single person: [Magnitogorsk Iron and Steel Works owner] Viktor Rashnikov.”
Marat Bashirov and Stanislav Naumov both argue that it’s unprofitable for official government relations specialists to use illegal methods. “If business people resort to anything corrupt, it’s often just a matter of survival,” Bashirov explains. “You certainly can’t [do that all the time]. In business, it’s impossible to legally factor in the corruption element. You’re always at risk and [dependent] on the person wearing the regulator’s uniform. He’s here today, but tomorrow’s he’s gone. Today he’s on board, but tomorrow he isn’t. It’s unpredictable, and business is a cyclical thing.”
Naumov says the notion that “businesses supposedly have boxes of cash lying around that they can just pick up and deliver somewhere” is an illusion. “What kind of wacky shareholder would allow his manager to walk off [with a box of cash]? But the main thing is this: how are you supposed to influence anything like that? You’ve got to be an expert, not a fixer, to shape policy and industry strategy.”
Nevertheless, lobbyists admitted to Meduza that a large black market for “fixers” still coexists alongside Russia’s unregulated, legal lobbying. Asked to describe how this world operates, some lobbyists repeated an anecdote about a businessman who made money off gullible student applicants to universities. “Some impressive guy in gold glasses approaches a crowd of eager applicants and says, ‘I can fix things for you and you’ll definitely get in. If you don’t, I’ll return the money.’ He takes their money, and drops it in his pocket. If the person gets in, he keeps the cash. If not, he issues a refund.” Either way, this “impressive” individual stands to lose nothing: some of his clients will be accepted at universities, regardless of what he does. Lobbyists say this is how “fixers” earn their living.
“There’s a whole generation of people who say they’re responsible for all the purchase orders by Rosneft, Rostatom, and Rostech,” explains political expert Andrey Kolyadin, who says these individuals try to convince businesses that they can win government contracts only with their help. They submit offers for everyone, and after the winner is announced they demand a fee for “resolving the issue.” “Can these people be called lobbyists? I don’t know about that. They’re scammers, not lobbyists,” Kolyadin says, accusing fixers of exploiting business people’s certainty that it’s impossible to win procurement contracts in Russia while operating on the level.
One lobbyist told Meduza that there are always droves of people circling the state bureaucracy (especially the Kremlin) who say they have connections for sale. Some of them work with bags of cash and others are pure scammers. Thanks to the prevalence of informal business practices in Russia, even experienced people get fooled by offers from “fixers.” For example, Konstantin Titov, a former senator and Samara governor, lost $6 million to a scammer posing as the head of a secret Kremlin banking group who convinced him to invest the money in “high-yield financials.” In reality, Titov’s “fixer” was unemployed, and the man’s accomplice was a humble driver.
Kolyadin says he was regularly approached with “interesting” proposals, when he worked as a state official. One of the most amusing incidents took place when he was lieutenant governor of Voronezh. “We got a visit from deputy envoy Sergey Samoilov,” Kolyadin recalls. “We were sitting around that evening, and suddenly I got a phone call from somebody saying, hey, they’re going to change the governor there, and if you’d like we can lobby for you and make you the next governor for 12 million rubles [$210,000]. I asked them how’d they do that, and they told me, ‘We’ll put you in touch with Sergey Samoilov and it’ll all happen through him.’ And he’s sitting right next to me. So I tell him about this, and he grabs my phone, and they actually argued with him about it!”
Kolyadin says he also encountered “fixers” like this when he was working in the Kremlin. “Near the presidential administration building, in Gostiny Dvor, there’s this little place called ‘Porto Maltese,’ where [officials and their friends] sometimes meet and shoot the breeze,” he says. “Once I arrived a bit early for a meeting, and there was this group in the corner that included two Kremlin staffers I knew. They both waved me over and I joined them. During the conversation, one of these dealmakers at the table (somebody I’d never met) started telling everyone that he was on good terms with Andrey Kolyadin, who he said determines the shortlists [for gubernatorial positions]. I was at a loss, and I asked him, ‘Well then who am I?’ And he said, ‘Who the hell knows.’”
“If you went to every restaurant in Moscow at the same time of day and recorded all the conversations, then 80 percent of them would be one ‘lobbyist’ talking to other lobbyists,” Kolyadin says. “This is a whole community that says: I know Ivan Ivanovich, and he knows Pyotr Petrovich, and he knows Patrushev’s son, and Patrushev’s son calls all the shots. Meanwhile, Patrushev’s son would never even guess that he calls all the shots.” Kolyadin points out that there are in fact people who are capable of negotiating with anybody and actually getting things done, but these individuals are rare.
Official lobbyists don’t work on issues related to Russia’s law enforcement agencies. “Sometimes people turn to government relations specialists when they’d be better off asking a coroner for cosmetics. At a minimum, they should retain a lawyer,” says Stanislav Naumov. “If the government comes knocking, then we’ve screwed up somehow as specialists, and this is precisely when a fixer’s work begins. He tries to delay the inevitable for a bit, until his customer can make it to the Canadian border.”
According to the businessmen who spoke to Meduza, unofficial negotiators work with both law enforcement agencies and the courts. The people offering these services are mostly former siloviki (security agency officials) and lawyers with connections, in addition to some well-known companies. They take “big money” to resolve “delicate issues.” “For example, if a court rules in absentia to fine you 5 million, then you need to find people who can offer help. You need former court bailiffs,” one source told Meduza. “For a commission of 10 percent (500,000 in cash), they’ll freeze the whole case. They can suspend the bank account deduction, withhold the money transfer from the plaintiff, or reclaim it immediately after the court’s absentia ruling is lifted (otherwise, the money can get hung up for a year). And they’ll be polite with you, not making you sit and wait in the hallway.”
Businessmen can also pay to “make life a nightmare” for their competitors and enemies, but they should expect to shell out at least $200,000 for such work. “You can arrange to have him interrogated by police, which is enormously stressful for ordinary people. You can make it so two subpoenas never reach him, and have him arrested at his home. You can stage a dispute and accuse him of obstructing [police] work, and now he’s being led away in handcuffs. Then he spends another day downtown being interrogated. There are still no criminal charges, but he’s returned everything already, and the problem is solved. Or some people don’t get the picture, and then there’s a criminal case.”
Another source told Meduza that it’s possible to prevent criminal prosecution “if you know where to run.” “For enough money, everything is possible,” he says. “The whole justice system is built on it: the motive, the weapon, the eyewitness testimony. For enough money, the evidence disappears, the witnesses change their stories, and the motive is nowhere to be found — even if it takes a fire at the police archives. Sometimes witnesses jump out of windows. [...] Say the police write you up for 10 million rubles [$175,600] in back taxes. Now you’re looking at a massive fine. If you know you didn’t do anything wrong, then you go to court. If you’ve been caught red handed, then it’s easier to solve this at a lower level for 10 percent than let it get to a higher level, where there’s criminal liability.”
The bag, the briefcase, and the trunk
“Some segments of the lobbying world are involved in negotiating certain sources of state funding — various procurement deals and so on. There are special people who deal with this, and they are much closer to what you might call ‘fixers,’ in my view,” says Oleg Rumyantsev. “In any case, when the state makes a purchase, there’s supposed to be a bidding process, and in order to circumvent this process you’ve got to devise something. You’ve got to fix it so you get the desired result. We don’t work in this segment.”
“A fixer is a bribe giver. The value of this approach in government relations is minimal. You’re handing over a smoking gun,” explains Stanislav Naumov.
Lobbyists told Meduza that fixers operate where there’s government money, not regulatory work. “It’s a purely corrupt thing. They usually offer access to resources or contracts, often to state purchases,” says Marat Bashirov, adding that some government relations specialists also work on state procurements, dealing with quotas and subsidies, but their methods are limited. They just “file all the paperwork correctly” and “see the procedure through correctly.” For example, if someone files a complaint against a company because it won a procurement contract, one of these specialists would go to FAS [Russia’s Federal Antimonopoly Service] with the necessary information and answer any questions. “FAS generally knows and trusts these people,” Bashirov explains. The law firm “Egorov, Puginsky, Afanasiev, and Partners” works well with antimonopoly officials, he says. “They’re expensive, ambitious guys.”
Most fixers work with municipalities, says Bashirov. Lobbyists for major companies, on the other hand, rarely interact with local officials at this level. They’re not interested in road repairs or CT scanner deliveries. “Representing a state contractor and hiding from a dozen regulatory agencies? Nobody needs that,” says Naumov, adding that corporate development budgets are bigger than any state subsidy.
“The main battle today is over state purchases,” Meduza learned from a lobbyist whose clients rely on government contracts. “Complete an expert report, deliver it somewhere, and write a nice cover letter in fluent bureaucratese — that’s all last-century stuff. Clients today demand key performance indicators that need to reflect how much of a product the government will be ordering.” The lobbyist told Meduza that he nevertheless doesn’t consider himself to be a “fixer”: he says he never uses bribes, and he doesn’t see anything shameful in working with major officials by “trading one service for another.”
A large percentage of the people in this profession call themselves lobbyists but are closer to fixers in reality, Naumov admits. “Especially wherever there’s some gray zone, where there aren’t clearly established procedures or regulations. It’s more likely when working with law-enforcement agencies, which have historically thought of themselves as more closed-off institutions, and it’s less common with civil, civilized officials,” he says. “The Federal Tax Service, for example, was able to shake off a lot of fixers just by opening an online taxpayer dashboard.” A government source also told Meduza that corruption has declined where officials have introduced automated processes, including at the Federal Tax Service.
A Moscow entrepreneur told Meduza that mid-sized businesses are fixers’ biggest customers. These enterprises have money, the businessman said, but unlike major corporations they lack connections: “The best thing you can do is to reach out to someone who understands the process and has contacts. Are these people lobbyists? If lobbyists are folks who network at Congress, then no. But if they’re people who solve problems, then yes.”
The people who work as “problem solvers” are typically former officials, simple “respected individuals,” or the friends and children of powerful figures, the source told Meduza. These fixers operate at different levels: “Some people help register small kiosks, and others approach deputy mayors. It’s basically the same thing.” The businessman said these individuals are usually men, “but there are women of the [Federation Council Chairwoman Valentina] Matviyenko type who are capable of turning up the heat.” You can find these “middlemen” throughout Russia, everywhere there’s a problem that needs “solving,” and anybody can play the role in the right conditions. “There’s a lobbyist inside every Russian,” one source told Meduza.
Another Russian businessman (who sometimes hires fixers and sometimes works as one himself) told Meduza that he thinks of lobbying and corruption as synonyms. “One person determines how a decision is made and another person relies on that decision. As a rule, these people aren’t acquainted. Lobbying is when I know a lot of people and I can resolve the issue with my connections,” he explains. “Say you need to exchange a million dollars for rubles. You’re nervous. It’s scary. You come to me, and I tell you: 2 p.m., Friday. The exchange costs you a bit more, but it comes with a service. Because I’m responsible for people, and you get your million dollars securely, with a neat little bow on top.”
The “problems” that fixers manage can be nearly anything, the entrepreneur told Meduza, such as paying cash to obtain a mining license in Ryazan with the money stuffed into “a bag, a briefcase, a trunk.” With a mine, fixers have to pay 10-20 rubles (about $0.26) per cubic meter (about 35 cubic feet) of known reserves. The businessman says the Russian government itself drives entrepreneurs to such corruption. “The current official procedure is competitive bidding, and whoever pays more is the winner. In reality, however, the winner is whoever they need it to be. What should happen is you come to Ryazan’s Ecology Ministry and say, ‘I’m building a road, and I need two million cubic [meters].’ Then there should be an official tariff, you pay it, and in a month you should get all the paperwork. And they’d tell you, ‘Bring this and that document and attend these public hearings,’” the source told Meduza.
“A state official usually agrees to work with somebody he already knows somehow. It’s rarer and rarer that they’ll even talk to somebody who just walks in from the street. They meet through friends and acquaintances, and love affairs are often used,” the businessman told Meduza. Fixers work with all kinds of clients, he says, including state officials. “They can’t do anything, after all. They don’t know how. And state officials need a lot of things, too. Do you have any idea how much it costs to get somebody treated at the right hospital?”